Why Sydney Airport Holdings Pty Ltd (ASX:SYD) has hit a 7-month high

The share price of Sydney Airport Holdings Pty Ltd (ASX: SYD) took off to a seven-month high this morning after the airport operator posted its monthly passenger traffic data for May.

The stock jumped 1% to $7.52 in morning trade as the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index gained 0.6% after management reported a robust 5.6% jump in international travellers last month compared to May 2017.

The result is particularly pleasing as it marked a big rebound from April’s traffic result which showed a modest 1.8% increase in international passengers moving through our largest airport at a time when inbound tourism appears to have peaked.

What’s more, Chinese visitor numbers have also bounced back from last month as they represented the biggest group of foreigners travelling through Sydney airport.

As much as it’s hard for many to acknowledge, our economy is being propped up by China and Sydney Airport is in a great position to benefit from this trend.

However, the latest Australian Bureau of Statistics (ABS) data points to a growing headwind for companies exposed to inbound tourism as short-term arrivals in March and April grew 5% compared to the 12-month average of 6%.

Meanwhile, outbound figures for the two months have jumped 5% versus the 4% average over a one-year period.

What this means is that growth in inbound tourist numbers could soften as more locals are travelling overseas.

Fortunately for Sydney Airport, this shouldn’t quite have as big an impact on its bottom line as both locals and foreigners have to use its terminals to enter and exit Sydney. The same can’t be said of other companies that are more dependent on international visitors.

These companies include theme park operators Ardent Leisure Group (ASX: AAD) and Village Roadshow Ltd (ASX: VRL), as well as Event Hospitality and Entertainment Ltd (ASX: EVT), according to Citigroup.

However, this doesn’t mean clear skies for Sydney Airport either. Rising international bond yields pose a threat as the higher yields will reduce the attractiveness of investing in infrastructure stocks like Sydney Airport and Transurban Group (ASX: TCL).

The more hawkish than expected US Federal Reserve means the threat of higher global bond yields is rising, and that could pose a greater risk to Sydney Airport’s share price than traffic numbers.

If you are looking for other stock ideas to help build your retirement wealth, you’d want to read the latest report from the experts at the Motley Fool.

They have uncovered four stocks that are perfect for those closing in on their retirement. Click on the link below to find out more.

4 Stocks for Building Wealth After 50

Renowned investor Scott Phillips just released a brand-new report detailing his 4 favourite stocks to buy right now.

And I don’t know about you, but I always pay attention when some of the best investors in the world give me a stock tip.

This is your chance to get in at the very beginning of what could prove to be very special investments.

Click here to get started today!

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Event Hospitality & Entertainment, Sydney Airport Holdings Limited, and Transurban Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…


The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!